Annual Report 2014

Annual Report 2014 - Board of Directors'
Report

On behalf of the Board of
Directors, I am pleased to submit the annual report of Al Maha
Petroleum Products Marketing Co. SAOG, to you for the year ended 31
December 2014, which marks the completion of 20 years of our
operations.

Overview

Even though oil prices have
declined during the last quarter of 2014, the Oman's economy
continues to remain strong and looks well placed to mitigate the
risks caused by the oil price fall.

2014 was a year when your Company
continued to progress at a faster pace. For the financial year
ended 31 December 2014, your Company recorded sales of RO 369.7
million, an increase of 16.1% (RO 51.2 million) over 2013 and net
profit has reached RO 10.7 million, an increase of 3.1% over 2013.

Total equity has increased to RO
48.6 million at the end of 2014 from RO 44.8 million at the end of
2013, registering a growth of 8.5 %.

Earnings per share have also
increased to RO 0.155 in 2014, compared to RO 0.151 in
2013(earnings per share of 2013 were restated due to splitting of
each share into 10 shares on 25 March 2014)

Major events during the year

1) Capitalising on the rapidly
growing demand for petroleum products, we expanded our filling
stations network by opening 6 brand new filling stations in 2014.
Now there are 188 retail outlets in various locations in Oman, with
another 6 stations in various stages of construction.

As part of the ongoing
rebranding programme, your Company, during the year, continued
its dynamic and innovative approach to offer our customers various
services and products in a modern ambience. Since the commencement
of the rebranding process, 59 existing filling stations have been
rebranded & refurbished till the end of 2014.

2) The commercial sales segment
continued to deliver strong sales performance during the year in a
challenging business environment through effective marketing
strategies and responsiveness to changing customer needs.

3) Backed up by new contracts won
during the year, the aviation sales segment also recorded a
significant growth.

4) With the objective to make your
Company's shares more attractive and affordable to investors, the
Extraordinary General Meeting of the Company held on 25 March 2014
resolved to split each share having nominal value of one Riyal
Omani into 10 shares with a nominal value of one hundred Baisa per
share. As a result of this, the total number of issued &
paid-up shares of the Company has increased from 6.9 million shares
to 69 million shares.

5) On 24 December 2014, the
Managing Director (at that time) & the Senior Marketing Manager
(at that time) of the company were called & questioned by the
concerned authorities. Subsequently, a court case was initiated
against the two employees in their personal capacities. The
Board of Directors resolved on 28 December 2014 to suspend the
services of the two employees until further notice & nominated
on 30 December 2014 Al Sayyid Munther Saif Hamed Al-Busaidi - the
Deputy Chairman, to take over the responsibilities of the managing
director until further notice .

Based on an independent legal
opinion, the company cannot be held liable for the wrongful acts of
these two employees especially because if the allegations against
them are proved, it will be a case where the two employees were
acting outside the scope of their lawful authority & will be
liable to any party who suffers loss arising from their
actions.

The Board of Directors has taken
necessary measures to ensure that internal controls are in place in
all business areas.

Market share

Your Company's market share in 2014
increased to approximately 34% based on the information published
in the financial results of the other petroleum products marketing
companies.

Reliance on suppliers / customers

The Oman Refineries and
Petrochemical Company LLC, continues to be the sole supplier of
petroleum products from its depots in Mina Al Fahal, Sohar &
Salalah (Raysut).

Our customers portfolio included
commercial & government organizations and no sales were made to
any of our customers which exceeded 10% of total sales in 2014.

Future plans

Despite the decline of oil prices,
the Government has already reiterated that development projects
would continue and ensured that steps are being taken to mitigate
the negative effects of the oil price slump. Your Company looks for
an optimistic year ahead for sustainable growth in our
business.

Dividend

In line with our consistent
dividend policy of maintaining a sustainable dividend payment,
which will address the financial strength of the Company, support
its long term strategies and at the same time, will pay a
reasonable dividend to the shareholders, the Board of Directors has
recommended a cash dividend of 110% of share capital (Baiza 110 per
share) against 2014 profit, subject to the approval of the
shareholders' Annual General Meeting.

Below are the dividends declared
since 2009 :

2014

2013

2012

2011

2010

2009

Cash dividend :

RO '000

% of share capital

7,590

110%

6,900

100%

6,210

90%

5,865

85%

4,830

70%

3,795

55%

Social responsibility

Your Company is committed towards
being a responsible corporate and will continue to participate in
community engagement activities to create long-term benefit for the
community and society at large.

Further. Your Company is committed
to continuing efforts to recognise hazards, assess health, safety
and environment risks in our operations and taking steps to
mitigate those risks to enhance our safety performance.

Acknowledgement

On behalf of the Board of
Directors, I take this opportunity to express our most humble
gratitude and loyalty to His Majesty Sultan Qaboos Bin Said, who
has been providing ideal political, economic, and financial
framework for all the sectors of the economy to flourish.

We thank our shareholders and
customers for their continued support. We extend our thanks to the
officials of Capital Market Authority and Muscat Securities Market
for their valuable support and co-operation. We also appreciate the
dedicated and committed service of our staff members.